Transcript of Web Interview of
David Schwartz
Chairman and CEO of ImaginOn, Inc.

IMON:   ImaginOn is a technology development company. We have several U.S. patents issued on proprietary technology for handling multi-media information and for finding that kind of information on any network or Intranet and then turning it around and making it presentable to the users.

CEO:    The Company’s flagship product is ImOn.comTV. What is it and why is this such a breakthrough?

IMON:   We believe this is the next thing in global television. I think everybody understands that television today is controlled on a global basis by literally a handful of people. You can count them on your fingers and toes. Because of the nature of the industry, these are restricted channels with heavy regulation. Huge investments of money are required to start up a TV station, and we all know that’s television, that’s broadcast. And then there’s the Internet, which is more democratic. Anybody can look at it, anybody can put content on it. There are hundreds of millions of Web pages now. It’s another media.

Imagine if that media, if the Internet could allow you to do video-quality television, with all of the attributes of the Internet. That is, being interactive, able to do something with video beyond just sitting there and watching. On a PC, we’re used to clicking. Well, if you click with video you can get all kinds of additional features, like being able to control what happens in the video, where the movie or the presentation goes when you click on the picture. We can link to an e-commerce page to buy something that you see right away on-line with your credit card, or to get a Web search report instantly just by asking for it or clicking on a picture. These are areas that are way beyond what conventional broadcast television can do.

These are the kinds of features that will drive the adoption of television on the Internet. We can put somebody into the Internet television business with an interactive TV station for a minimal investment compared to what a conventional station costs.

CEO:    How does this turn a static website into an interactive TV station using, of course, broadband?

IMON:   Well, let’s think of anybody who has content. If they have a bunch of videotapes stacked up on a closet shelf someplace that they shot either of their family, their business, or events, tradeshows, or product presentations. We can put that on the Internet. Most companies have a stack of videotape that they’ve built up showing off what they do -- their services or products. To put that on the Internet in an interactive format, there are really only two steps. One, digitize it so that it is no longer tape. It’s video files on a hard drive.

And number two, move that data from that hard drive to one of our servers. Buy one of our servers, or lease one of our servers or space on one of our servers, and put the video there. All of the features that make it interactive are part of our software that lives on the server. The user sees it in their browser, so there’s no software from the user’s point-of-view other than their computer and their browser. So you need a computer, a browser on that computer and, ideally, a broadband Internet connection. So once you have that, you can see the content in an interactive format.

CEO:    What kinds of things does this allow somebody to do as they interact? Perhaps you could give an example.

IMON:   Well, I’ll give a couple of examples. In the entertainment space, we’re used to watching televised entertainment or, let’s imagine a soap opera for a minute. It has a plot. For example, when Jenny tells Bill she’s pregnant and Bill tells her it’s not his, etc. With interactive TV, you could offer the soap opera watcher a choice at that point of Bill’s reaction or his brother’s reaction (who of course is really the father of the child). If you click on his picture, the story goes off on Bill’s story. If you click on his brother’s open mouth at that point, the soap opera takes off on the other guy’s story. So you actually create multiple plots within the entertainment product. This makes it a much different experience than just watching a soap opera.

Now, let’s take that in the commercial arena. For example, corporate training. If you’re training a human resources person, on how to do an interview in an appropriate way, how to interview a perspective female employee, there are questions that you can ask and there are questions that you can’t ask under the law. It will get you in trouble. You can actually show an interviewer a prospective job applicant on video conducting an interview. And when the interviewer gets a choice of what question he’ll ask, you can have the trainee as he is learning, ask it. You can have your alter ego, who’s in the video, ask the right or wrong question, and then you can actually see the consequences of your decision. The video proceeds to the outcome of what you decided to do. So this is a tremendously powerful tool for training, and it’s very entertaining in the entertainment space as well.

CEO:    It would appear that since so many people today are trying to aggregate content with commerce, that this would create especially attractive opportunities in the e-commerce space. What’s the strategy there?

IMON:   Well, this furthers the concept of product placement, in movies. Companies like Coca Cola and Pepsi pay movie producers to put their cans of soft drinks in the picture. In fact, advertisements are sort of built into the movie. You don’t really recognize it as an advertisement, it’s just product placement. Well, in interactive television on the Internet, when you see that can of Coke in somebody’s hand in a picture, if you click on the picture at that point, you can actually branch off to a Web page owned by Coca Cola Corporation with a coupon on that page or with a promotion that’s related to that movie. So there’s instant e-commerce, advertising linkage to the content that’s being presented in interactive TV.

Or to, look at it in another way. If you’re watching a Jet Ski race and you click on the Yamaha Jet Ski as it goes by, you could go to Yamaha’s e-commerce page to get more information about that Jet Ski or find a dealer near you.

CEO:    The Company’s identified seven sales and marketing channels, which make sense for it, everything from broadcast to adult entertainment. Where are you today, and how do you go about making inroads into these channels?

IMON:   Well, our primary means of communicating with these channels is a combination of direct mail and trade show attendance. We target a convention or a trade show for that industry that’s very focused on that industry and then go there to pitch it with specific literature that shows how interactive TV works in that market segment. For example, we were recently in a trade show in Las Vegas for the adult entertainment industry. All of our demonstrations and printed material are oriented towards how interactive television technology makes sense for the adult entertainment industry.

A few weeks before that we were at PC Expo in New York, and all of the literature and all the presentations were oriented towards corporate training and e-commerce, showing people how our technology and how our system, ImOn.comTV, works in those markets. So we have very targeted strategies in these seven different markets.

CEO:    Many companies are focusing on video as broadband continues to evolve. What else is available today and how is ImOn.comTV different?

IMON:   Well, the key for us is interactivity. I think everyone’s already seen the video on the Web, little TV pictures that show up on your computer screen. You just sit there and watch them. Even with the latest generation of those video displays, from Real Networks, Microsoft or Apple, the most you can expect from them is a place on the side of the video where you can click and get to a web site. It’s a pretty crude form of presentation. There’s no interactivity to speak of. There’s no way to control the video other than to stop it and start it. We bring this whole dimension of real-time interactivity and a built-in search engine so that in-depth information about whatever is being displayed can be obtained very quickly without any typing, just by asking for it.

CEO:    Is this a complete solution and how is it priced?

IMON:   Well, the low end, the smallest system we have at a list price of $35,000, including the server and all the software and one year of support, free upgrades, training and content - handles thousands of people per day. At the high end, we have a package system at $84,000 that will serve tens of thousands of people per day, or more. And then because these are modular, no matter which base system somebody buys, $35,000, $50,000, whatever, they can rack up additional modules of the server to increase the number of channels that can be interacted with in any given time.

CEO:    Is there any other software that they have to buy? How long does it take to implement?

IMON:   Well, we promise delivery, and that the customer will be up and running within four weeks. Typically, we’ve actually done it faster than that. There’s nothing else to buy, it is a complete package. It is a server with all the software. It spawns the clients that the viewer sees in their browser. So there really isn’t any other software. It’s a whole system in a box. We call it a TV station in a box, because it’s certainly all there. If you’re going to add new material, new content that’s not on tape, that’s from cameras, then there’s the issue of hooking up an optional video camera. But that’s possible, too.

CEO:    When you look at the acceptance so far, what kind of response have you had?

IMON:   Well, the response has been terrific in terms of numbers of leads and people asking us for more information. We’re responding as quickly as we can to people and putting out proposals and moving ahead with closing deals. It’s pioneering a new product in a new industry. It’s quite challenging, but we’re making great progress.

CEO:    Have there been clients that have committed to the system that are now seeing installations?

IMON:   You can actually see a number of our clients. We ourselves own a set of domain names from Channel1TV.com through Channel99TV.com except for Channels 4 and 7. All the rest of them are ours. And what we do for many of our clients, if we can get permission, which we get from most of them, we copy their station, if you will, to our channel set. So, for example, you’ll see Golf Magazine’s channel at Channel 31. You’ll find Trashy Lingerie at Channel21TV.com. So people looking up and down that set of channels will see a number of installations already up and running. I expect by the end of the year there will be, I hate to speculate, but a lot of, the 100 slots will be filled.

CEO:    What’s the next milestone for the Company?

IMON:   I would like to see our revenues continue to increase. I don’t know that I can say there’s one specific milestone. It’s just sell more ImOn.comTV systems, get more installations done. That’s really what it is, growing revenues.